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VANCOUVER — Online eyewear retailer ClearlyContacts.ca has become the first major Canadian ecommerce retailer to accept Bitcoin as payment.

Roger Hardy, founder and CEO of Vancouver-based ClearlyContacts.ca, said his company’s decision to start accepting Bitcoin was prompted not only by customer demand but also by urging from its staff members, many of whom are in their 20s.

“Our staff said ‘We’re a technology business, we need to be at the front of this trend,’ ” Hardy said. “This is going to get more traction. You can tell when these trends are going to stick. They start with the 20-somethings, they say, ‘This is the next Facebook and we want to be part of it.’ ”

But while the company is the latest to join a growing trend, a report released Wednesday warns the digital currency lacks the legal framework it needs to move mainstream.

“If Bitcoin wants to continue to grow it will have to be adopted by more consumers, companies and maybe even banks,” said David Descôteaux, author of the Montreal Economic Institute’s publication Bitcoin: More Than a Currency, a Potential for Innovation.

“If this is to happen, there is a need, I believe, for a regulatory framework.”

Descôteaux said while there are advantages to the cryptocurrency, there are also risks.

“From a consumer side, a lot of people would be afraid of having no recourse if they use Bitcoin to pay for something. And from the point of view of merchants and businesses, I think some of them want to use Bitcoins as a form of payment, but they don’t know what to do, how to comply with the law and how to pay taxes.

“A legal framework is something Bitcoin needs if it is going to go mainstream.”

Despite the stumbling blocks, Descôteaux sees great potential in Bitcoin, which is bought and sold online in a peer-to-peer network, without any central regulation.

“I like what I see, it’s fascinating. It could disappear tomorrow but I think it’s promising,” he said.

“I’m not saying this is going to change the world but I believe it can benefit the whole economy.”

Vancouver became home to the first Bitcoin ATM in the world last October and more are being rolled in cities including Toronto. The price of the digital currency, which is created electronically and stored in a virtual wallet, has experienced wide fluctuations, but Wednesday was around $940.

There are no regulations in Canada governing digital currency, although the Canada Revenue Agency issued a fact sheet last November saying that if such currency is used to pay for goods and services, “the rules for barter transactions apply,” and the value of the transaction — in Canadian dollars — must be included in the seller’s income when it comes to taxes.

While the volatility of Bitcoin is among its risks for retailers, Descôteaux pointed out that several companies now offer guaranteed conversion rates for a fee considerably lower than that associated with credit card transactions. ClearlyContacts.ca uses such a service to protect it from sudden swings in the Bitcoin rate.

“ClearlyContacts does business in about 20 currencies today, which all have some level of complexity and variability and movement,” said Hardy. “This is not unlike those.

“Within milliseconds of receiving Bitcoins, we will have transferred them to an agent that will process the Bitcoins and return Canadian dollars to us. We’re a global business, we transact all over the world in multiple currencies, this is just one more.”

Hardy said Bitcoin transactions are more cost-effective than credit card transactions. He said his company is currently accepting Bitcoin payments from customers who call in, but within a month, customers will be able to pay with Bitcoin online. Customers who pay with Bitcoin will be covered by the company’s 366-day return policy. Credit card companies charge merchants a fee that varies with the card but can be in the 1.5 to three-per-cent range.

“I think there are a number of alternate payment options, they all keep growing and taking a little market share from Visa, MasterCard and Amex,” said Hardy. “Competition in the end is always good for the marketplace and if Bitcoin increases competition, fantastic, customers will be the winners.”

An increasing number of businesses in Metro Vancouver are accepting Bitcoin in payment for goods and services, including Waves Coffee House, and Abbotsford developer Quantum Properties is also accepting Bitcoin for deposits for home sales. The giant retailer Overstock.com started accepting Bitcoin, tallying up the equivalent of $130,000 US in Bitcoin transactions in the first day its customers could start paying with the cryptocurrency.

Just as peer-to-peer music sharing impacted companies in that space, Bitcoin could impact everything from money transfer services such as Western Union to banks. Wells Fargo & Co., the fourth-largest U.S. bank by assets, has called a meeting of finance executive, U.S. government representatives and experts in digital currency to discuss to discuss “rules of engagement” with Bitcoin, according to a report in the Financial Times.

- The fee for converting Bitcoin to dollars is very low, less than one per cent, compared to higher credit card fees for merchants.

- Customers don’t have to provide a credit card number or enter personal information, which helps protect them against identify theft of credit card theft.

- Transactions are protected by a cryptographic signature, which is a private key associated with its virtual wallet

- Bitcoin can serve as a protection against the possibility a government will impose capital controls, since it can’t be controlled by any government

- It allows for the transfer of money across international borders without incurring the high fees usually associated with such transactions.

Cons

- It is difficult or impossible to have recourse in the event of fraud because transactions are irreversible unless the recipient agrees to reimburse you.

- The currency is volatile although there are companies that offer instant conversion, mitigating the risk to sellers that they may accept a Bitcoin price for an item only to have the value of Bitcoins plummet.

- The quasi-anonymity of Bitcoin transactions allows them to be used for fraud and money laundering, although Descôteaux points out in his report that cash carries similar risks.

- Users are not fully protected from hackers and electronic theft

- Bitcoin is operating in a legal “grey zone,” with countries like China and France expressing reservations

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